Shares of healthcare logistics company Owens & Minor Inc. (OMI) fell approximately 2.4% following the completion of its previously announced acquisition of Medical Action Industries (MDCI). Based in the U.S., Medical Action is a manufacturer of custom procedure trays and minor procedure kits.
Owens & Minor declared that effective Oct 1, 2014, it has acquired all outstanding shares of Medical Action for $13.80 per share in cash, or approximately $207 million, including assumed debt, net of cash. The transaction was funded with cash on hand, which included proceeds from the company’s recently completed public offering of senior notes.
The acquisition of Medical Action is expected to be accretive to Owens & Minor’s adjusted net income in 2015, including anticipated partial synergies in the first full year of ownership. Owens & Minor estimates annual pre-tax cost synergies of $10 to $12 million by the end of 2016, excluding potential revenue synergies.
Apart from transaction-related costs, which will be reported as acquisition-related and exit and realignment charges, the impact to Owens & Minor’s 2014 adjusted net income per share will be limited primarily to the fourth quarter of 2014, and is not expected to be significant as well.
Last month, Owens & Minor signed a definitive agreement to acquire ArcRoyal – an Ireland-based privately-held surgical kitting company, intended to expand its global reach and strengthen its manufacturer service offerings in the assembly of kits, packs and trays.
The acquisition of Medical Action and the impending ArcRoyal takeover (projected to close in the fourth quarter of 2014) are highly complementary and are expected to enhance Owens & Minor’s global sourcing opportunities. The buyouts are also expected to significantly advance Owens and Minor’s strategy of “Connecting the World of Medical Products to the Point of Care” by extending its service offerings to provider and manufacturer customers.
Currently, Owens & Minor carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical products industry include ICU Medical (ICUI), OraSure Technologies, Inc. (OSUR) and ZALTIQ Aesthetics, Inc. (ZLTQ). All these stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment